Pilgrim's Pride To Report 4Q Loss On Cost Pressure

By AP &nbsp|&nbsp

Updated: Thu 6:55 AM, Sep 25, 2008

PITTSBURG, Texas - Chicken producer Pilgrim's Pride Corp. said Thursday it expects to report a "significant loss" in its fiscal fourth quarter and will not be in compliance with one of its debt covenants.

The company said the big quarterly loss stems from high costs for animal feed, which is made with corn and soybeans. The price of both grains have jumped to record-levels in the past year.

Although most companies try to recoup costs through higher retail prices, Pilgrim's Pride has not been able to do so due to weak demand for breast meat and an oversupply of meat on the market.

The company did not offer any details about the size of the loss. Analysts polled by Thomson Reuters expect a loss of 89 cents per share for the fiscal fourth quarter.

The company said it will not meet its fixed-charge coverage ratio debt covenant under its principal credit facilities for the fiscal year ended Sept. 27. The fixed-charge coverage ratio indicates whether a company can satisfy fixed financing expenses like interest and leases.

Pilgrim's Pride said, though, that it "believes it has reached an understanding" with its lenders to temporarily waive that debt covenant through Oct. 28 and to continue offering the company liquidity under its credit facilities during that time period.

The company said it still needs to hammer out a written agreement with its lenders for the waiver. If it is unable to secure an agreement, Pilgrim's Pride said it may not be able to draw funds under the facilities and the lenders may be able to say the company defaulted on the loans.

Online Public Information File

Viewers with disabilities can get assistance accessing this station's FCC Public Inspection File by contacting the station with the information listed below. Questions or concerns relating to the accessibility of the FCC's online public file system should be directed to the FCC at 888-225-5322, 888-835-5322 (TTY), or fccinfo@fcc.gov.